Azerbaijan Central Bank preparing concept of digital manat
The Central Bank of Azerbaijan (CBA) is reportedly studying the possibility of issuing a central bank digital currency (CBDC). Apparently, so said Rashad Gasimov of the CBA’s National Payment Systems Development Division of the Payment Systems and Settlements Department during the Finance and Technologies Expo held in Baku, on June 16-17. [Read more]
Miners as intermediaries: extractable value and market manipulation in crypto and DeFi
A Bank for International Settlements (BIS) paper explains decentralized finance (DeFi) miner extractable value (MEV) and why it arises, documents the amounts involved, and draws regulatory
implications for cryptocurrencies, DeFi and other blockchain-based applications. Cryptocurrencies and DeFi protocols built on them rely on validators or “miners” as intermediaries to verify transactions and update the ledger. Since these intermediaries can choose which transactions they add to the ledger and in which order, they can engage in activities that would be illegal in traditional markets such as front-running and sandwich trades. The resulting profit, or MEV, is an intrinsic shortcoming of pseudo-anonymous blockchains. [Read more]
Bitcoin Veterans Know to Keep Their Eyes on $19,511 Level
Bitcoin’s high during its last bull cycle in 2017 $19,511 is widely seen as the level at which many hodlers will capitulate and wind-down leverage (bitcoin is currently hovering above the $20,000 level). According to Arcane Research, throughout its roughly 12-year trading history, bitcoin has never dropped below previous cycle peaks, so a break below it would be momentous. In addition, most of the open interest in bitcoin options is based on the $20,000 strike price, which could contribute to selling pressure in the spot market should the price fall below that level. [Read more]
BIS Innovation Hub announces expanded cyber security experiments
The BIS Innovation is launching a project to examine how the introduction of quantum-resistant cryptography will affect payment system performance, and investigate and test potential cryptographic solutions that can withstand the vastly improved processing power of quantum computers. Given the long-term sensitivity of financial data, this vulnerability must be addressed well in advance of the advent of quantum computing. [Read more]
Upcoming events I’m affiliated with:
The second session of the CBDC Think Tank CBDC Papers Lecture Series will be held on June 24 starting at 7am EST and run for 4 hours. [View list of papers and register here]
The CBDC Think Tank, in partnership with the International Monetary Fund and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC. The sessions are designed as instructional deep dives with full presentations and Q&A components. [Register here]